Use the following case from question
Two roommates John and Joe are playing a simultaneous game of cleaning the apartment.If neither of them clean,the apartment gets filthy and both get a utility of 2.If John cleans and Joe doesn't,John gets a utility of 1 and Joe gets a utility of 4.If Joe cleans and John doesn't,Joe gets a utility of 1 and John gets a utility of 4 and if both clean up the apartment,they each get a utility of 3.
-If the apartment owner decides to fine both the roommates if the apartment is dirty,such that now if neither of them clean they each get a 5 utility loss,what would the new equilibrium be now?
A)John cleans,Joe doesn't
B)Joe cleans,John doesn't
C)Neither of them clean the apartment
D)Both A&B

Question

​Use the following case from question
Two roommates John and Joe are playing a simultaneous game of cleaning the apartment.If neither of them clean,the apartment gets filthy and both get a utility of 2.If John cleans and Joe doesn't,John gets a utility of 1 and Joe gets a utility of 4.If Joe cleans and John doesn't,Joe gets a utility of 1 and John gets a utility of 4 and if both clean up the apartment,they each get a utility of 3.
-​If the apartment owner decides to fine both the roommates if the apartment is dirty,such that now if neither of them clean they each get a 5 utility loss,what would the new equilibrium be now?
A)​John cleans,Joe doesn't
B)Joe cleans,John doesn't
C)Neither of them clean the apartment
D)​Both A&B

Quizplus · Accepted Answer

With the added cost of a 5 utility loss for both roommates if the apartment is dirty, neither of them would want to risk getting fined. As a result, both would prefer to clean the apartment (3 utility each) rather than getting a 5 utility loss each. However, if one of them cleans and the other doesn't, the one who cleaned would only get a utility of 1, which is much lower than the utility they would get if both cleaned. Thus, there is no dominant strategy in this case, making the Nash equilibrium of the game to be both choosing not to clean (getting 2 utility each) as no one has an incentive to deviate from their strategy. Therefore, the best choice is D, where both John and Joe do not clean the apartment.

​Use the Following Case from Question

Use the Following Case from Question